Go-Ahead benefits from congestion charging

Go-Ahead, the UK bus and train operator, yesterday posted a £16m loss for the year to 3 July, after it was forced to make a £67m goodwill write-down on its flailing baggage handling division.

Go-Ahead, the UK bus and train operator, yesterday posted a £16m loss for the year to 3 July, after it was forced to make a £67m goodwill write-down on its flailing baggage handling division.

Aside from its aviation operations, however, the group's underlying business continued to thrive, with profit before goodwill, exceptionals and tax up 39 per cent for the year, to £91.3m, driven by strong growth in its UK bus and rail operations.

Overall, buses contributed £54.2m of operating profit for the year, compared with £43.9m the previous year. The group's rail operations, which include the Southern and Thameslink franchises, increased their operating profit from £25m to £40.9m. Although the company recently lost its Thames Train franchise, it is now in the running to pick up the newly integrated Kent rail franchise, which will be awarded by the Strategic Rail Authority at the end of the year.

The group once again increased its final dividend significantly to 27p, giving the firm a total dividend of 38p for the year, equivalent to a yield of 3.2 per cent at yesterday's closing share price of 1160p.

Go-Ahead's chairman, Sir Patrick Brown, said yesterday that the strong underlying results were due in part to an increasing number of people taking to public transport in London following the introduction of the congestion charge. Go-Ahead runs one in five London buses, as well as its rail franchises.

Sir Patrick conceded that conditions continue to be tough within the aviation services market, but said the group had made some notable achievements recently, including the negotiation of longer-term contractual changes with its clients and employees.

He added that the first two months of the new year, which began at the start of July had gone well. "We have confidence in the future performance of our businesses," he said.

Commenting on the group's overall loss, Martin Ballinger, the outgoing chief executive who steps down at the end of this year, said: "I go out as the chief executive with a £67m write-off. They usually wait until the chief executive goes before they have a bonfire." Mr Ballinger will be replaced by his deputy, Chris Moyes.

In spite of protests from traditionalists, Go-Ahead reiterated yesterday that it was committed to replacing its Routemaster fleet of buses - which allow customers to hop on and off whilst the vehicle is moving - with "one-person-operated buses" which have driver-operated doors. He said the Routemasters had a "dismal record of assaults on conductors", and offered no restraint to stop customers accidentally falling off.